Belarus President Alexander Lukashenko, who’s labored for years under the title of Europe’s last dictator, is making a bid for a shiny new image as the continent’s freewheeling cryptocurrency king.
Belarus is seeking to capitalize on a thriving tech industry that’s grown up there in recent years as young programmers have created products that appeal far beyond the borders of the former Soviet republic. The phone messaging application Viber was developed in Belarus as were the NYSE-listed offshore programming company EPAM Systems Inc. and the popular online gaming service World of Tanks, which made founder Victor Kislyi the country’s first billionaire.
Even as Alphabet Inc., owner of Google, and Facebook Inc. snapped up Belarus-made startups, the country’s restrictive business environment made it all but impossible for venture capital to flow freely into promising ideas. Lukashenko’s new law may change that.
Belarus plans to cloak its repressive reputation with a “sandbox” — the creation of a legal tech enclave where companies working with digital currencies will pay no taxes and rely on some elements of English law in commercial matters, a radical innovation for a country whose security service is still called the KGB.
The sandbox would be set up within the so-called Hi-Tech Park, which the authorities opened in 2005 near the capital, Minsk, to try to spur innovation. Today, most of the park’s residents are offshore software companies taking advantage of cheap and skilled local programmers as well as reduced taxes to serve foreign clients.
Lukashenko said this month that his goal in signing the decree is to make Belarus a “tech nation.” The country’s major technology companies lobbied for the legal changes, which also gained support among government officials and in the central bank.
The novelty of the proposed law is that Belarus would provide legal clarity for dealing in digital currencies which is yet unseen in other countries, said Denis Aleinikov, whose law firm Aleinikov and Partners helped to draft the decree. It also establishes a direct legal link between issuers of tokens and their obligations toward the holders.
To protect against fraudsters, the regulation would set capital requirements for operators of cryptocurrency exchanges. It would also introduce “smart contracts” in Belarus — self-executable computer-coded applications that serve as an alternative to traditional paper agreements.
“The decree has been written exactly the way our tech community wanted it,” Vsevolod Yanchevsky, head of Hi-Tech Park, said in an interview in Minsk. “Belarus will be one of the best jurisdictions in the world for cryptocurrencies and blockchain.”